Greenwashing refers to the marketing practice in which businesses seek to capitalize on the growing movement for environmentally sound products by selling goods labeled as green that actually aren’t.
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The EU outlined new measures designed to prevent companies from making unsubstantiated environmental claims about their products, warning firms they could soon face penalties amounting to at least 4% of their annual revenue for “greenwashing.”
The European Commission, the EU’s executive arm, published its so-called “Green Claims Directive” on Wednesday. The highly anticipated proposal seeks to establish an EU-wide methodology that will help to clean up the environmental claims marketplace.
The directive is subject to the approval of the European Parliament and Council before it can then come into force.
The EU says it is hoping to provide more clarity to consumers so that when a product or service is sold as green, they can trust that it is actually environmentally friendly.
Today, most green claims are too good to be true and the proposal is… far from the real (green) deal.
Margaux Le Gallou
programme manager for environmental information and assessment at Environmental Coalition on Standards
However, the proposals have drawn a mixed response from consumer and environmental groups.
Campaigners have broadly welcomed the drive to curb the burgeoning corporate greenwashing trend but say that a months-long lobbying effort has “substantially watered down” the directive to such an extent that the measures are now too vague to sufficiently address the problem.
They have called on the European Parliament and the Council to improve the proposals so that they are “of value” to consumers and companies.
What is greenwashing?
Greenwashing refers to the marketing practice in which businesses seek to capitalize on the growing movement for environmentally sound products by selling goods labeled as green that actually aren’t.
It is a significant problem within the EU. For instance, a commission study published in 2020 found that more than half (53%) of green claims on products and services were deemed to be vague, misleading or unfounded, while 40% were unsubstantiated.
Some phrases that consumers may have become accustomed to when purchasing goods include “eco-friendly,” “ethical” or “sustainable.”
The commission says there are about 230 different environmental labels being used across the 27-nation bloc, citing evidence that this leads to confusion and distrust among consumers.
What is in the EU’s ‘Green Claims Directive’?
The EU’s “Green Claims Directive” seeks to tackle this trend.
It says the proposal will ensure that claims are communicated clearly to the benefit of consumers — and businesses, noting that firms making a genuine effort to improve the environmental sustainability of their products should be more easily recognized and therefore able to boost their sales.
The measures target explicit claims, the commission says, such as “CO2 compensated delivery,” “packaging made of 30% recycled plastic” or “ocean-friendly sunscreen.”
It does not, however, cover terms such as “carbon neutrality,” advocacy groups said, noting this is a favored marketing strategy for companies seeking to give their products a “green makeover.”
“This proposal is a huge missed opportunity to send a powerful message to corporations that the EU is taking corporate climate responsibility seriously,” said Lindsay Otis, a policy expert on global carbon markets at Carbon Market Watch.
“The Commission appears to understand the problems created by greenwashing, but refuses to adequately address them,” Otis said. “It is now up to the European Parliament and Council to enact a ban on carbon neutrality claims, because anything short of that will not only fail to protect consumers, but will also fail to push corporations towards truly sustainable practices.”
“With this proposal, we give consumers the reassurance that when something is sold as green, it actually is green,” said Frans Timmermans, executive vice-president for the European Green Deal.
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The EU says that before companies communicate any of the covered types of green claims, companies must first have them independently verified and proven with scientific evidence. EU member states would be in control of establishing a verification process that’s overseen by independent bodies.
Firms based outside the EU making green claims that are targeting the bloc’s consumers would also be required to abide by the directive.
“Green claims are everywhere: ocean-friendly t-shirts, carbon-neutral bananas, bee-friendly juices, 100% CO2-compensated deliveries and so on,” said Frans Timmermans, executive vice-president for the European Green Deal.
“Unfortunately, way too often these claims are made with no evidence and justification whatsoever,” he added. “With this proposal, we give consumers the reassurance that when something is sold as green, it actually is green.”
The proposal excludes claims that are covered by existing EU rules, the commission says, such as the EU Ecolabel or the organic food logo.
What’s been the response?
Margaux Le Gallou, programme manager for environmental information and assessment at the non-profit Environmental Coalition on Standards, said “tackling misleading green claims is crucial to ensure consumers get reliable information and are empowered to make sustainable choices.”
“Sadly, without harmonised methodologies at the EU level, the new Directive will provide little clarity to consumers and business, and will only complicate the job of market surveillance authorities. Today, most green claims are too good to be true and the proposal is … far from the real (green) deal,” Le Gallou added.
Others were more optimistic about the potential impact of the measures put forward by the commission.
The proposals “will help provide more clear language, shared governance criteria and minimum requirements to communicate corporate climate efforts in authentic, credible ways,” said Isabel Hagbrink, director of global communications at South Pole, a climate strategy and solutions company.
“This, in turn, we hope will help inspire greater and more genuine corporate climate ambition,” Hagbrink told CNBC via email. “Given that we are well into our decade of action and climate scientists have once again sounded the alarm, we simply cannot afford to have anyone — in particular big corporate leaders — ‘green-hush’ on their climate efforts,” she added.